Fleet Insurance: What Is It & How Does It Work?

Fleet Insurance
Image Source: freepik

Fleet insurance and transit insurance are two types of insurance policies that each business owner or individual with many vehicles should have. The main benefit of this coverage is that it allows you to insure many vehicles under the same policy. Minibuses, trucks, taxis, and heavy-duty vehicles (HGVs) all fall within this category. Learn more about fleet insurance coverage, including its features, rates, and requirements, in this article.

What is Fleet Insurance?

Fleet insurance is a special type of insurance coverage designed for businesses that own or operate multiple vehicles, often referred to as a fleet. Instead of insuring each vehicle individually, fleet insurance allows businesses to cover all their vehicles under a single policy. This can include various types of vehicles, such as cars, trucks, vans, or even specialized vehicles used for business purposes.

Fleet insurance offers several advantages to businesses. Firstly, it simplifies the insurance process by consolidating coverage, paperwork, and payments into one policy, making it easier to manage. Secondly, it often provides cost savings compared to insuring each vehicle separately, as insurers may offer discounts for bulk policies. Additionally, fleet insurance can be tailored to meet the specific needs of the business, including coverage for different types of vehicles, drivers, and usage patterns.

To determine the cost of fleet insurance, insurers consider factors such as the number and types of vehicles, the driving records of the drivers, the purpose of vehicle usage (commercial deliveries, transportation services, etc.), and the overall risk profile of the business. Having fleet insurance helps businesses protect their assets and manage potential risks associated with operating multiple vehicles for commercial purposes.

How Does Fleet Insurance Work?

Vehicle insurance is mandatory for all vehicles, but especially those used for work. The owner of a vehicle involved in an accident is responsible for a wide range of costs, including those associated with repairing or replacing damaged or destroyed property, paying for medical care, and replacing lost time or income. In the event of a catastrophic accident, the owner may not have the financial resources to cover the costs associated with the incident. If something were to happen to the company, insurance would cover the costs associated with continuing operations. Indeed, mishaps are inevitable. 

Fleet insurance coverage allows you to insure a group of vehicles under a single policy, shielding your company from financial loss in the event of an accident. All of your automobiles are protected under one policy when you invest in fleet insurance. There is no requirement for uniformity among those who insure vehicles, and individual drivers are not covered. You can protect your company’s fleet of vehicles with this insurance. Examples of some of them include: 

  • Large trucks used for shipping and transport
  • Machinery (including forklifts) used in construction
  • Everyday cars and vans used for transport, delivery or other operations
  • Cargo vans

However, your fleet insurance coverage will protect your vehicles regardless of how they are put to use for the firm. 

Who Has Access to Fleet Insurance?

Many businesses can benefit from fleet insurance, although the policy’s applicability is often overlooked. Fleet insurance typically covers any business with a fleet of two or more cars. To be more specific, most fleet insurance policies demand merely that the vehicles be utilized for commercial purposes and that there be two or more vehicles in the fleet. Typically, fleet insurance is used to cover between two and five hundred cars, while some policies stipulate a minimum number of vehicles. 

Fleet insurance is available to businesses in all sectors, but some coverage details may be mandatory for certain sectors. For this reason, a generic fleet insurance policy is not appropriate for a business that operates a fleet of taxis but rather requires taxi-specific insurance. 

Depending on how many vehicles you insure, different policies will be required. A small fleet insurance policy, sometimes known as a “mini fleet” policy, is sufficient for a small to medium-sized fleet. If your company has a small fleet of vehicles, this type of policy may be the most cost-effective option. In addition, they are fantastic for local companies generally.

 Large fleet insurance packages can assist you in obtaining adequate protection for your business’s fleet of vehicles. An expansive policy with additional coverage is ideal for large corporations with hundreds or thousands of vehicles. Consult with your insurance agent or broker to choose the appropriate fleet insurance policy for your company’s needs. 

Who Is Covered Under Fleet Insurance?

Under fleet insurance, the coverage typically extends to all vehicles owned or operated by a business as part of its fleet. This includes cars, trucks, vans, and other types of vehicles used for commercial purposes. Additionally, fleet insurance can cover various drivers, such as employees, contractors, or authorized personnel, depending on the policy terms and conditions.

It’s important for businesses to specify the drivers they want to be covered under the fleet insurance policy. These drivers might need to meet certain criteria, such as having a valid driver’s licence, a clean driving record, or specific training if they are operating specialized vehicles. Some policies may also cover occasional or temporary drivers, but it’s crucial to check the policy details and discuss specific driver requirements with the insurance provider.

Businesses should work closely with their insurance provider to ensure that the policy adequately covers all authorized vehicles and drivers within their fleet, minimizing potential risks and ensuring comprehensive protection in case of accidents or other unforeseen events.

What Does Fleet Insurance Cover?

In comparison to standard auto insurance, what does fleet insurance cover, given that it applies to all of your vehicles? Depending on the coverage, fleet insurance often addresses the following three concerns: 

#1. Bodily Injury

This type of fleet insurance pays for medical expenses related to bodily harm sustained as a result of vehicle operation. The majority of service providers will also cover your legal representation costs under this policy.

#2. Combined

It’s possible that your company will choose to buy only liability insurance or only property insurance.

However, in most cases, it would benefit your company to buy both. This is when the concept of CSL (Combined Single Limit) liability comes into play.

Both bodily injury and property damage claims against your fleet will now be subject to the same amount limit thanks to this coverage’s consolidation of two policies into one.

#3. Comprehensive

If your company owns a fleet of cars, you should invest in fleet insurance to cover losses from:

  • Vandalism
  • Fallen tree limbs
  • Severe weather
  • Theft
  • Bad roads
  • Animal strikes

Technically speaking, comprehensive insurance aids in paying for repairs after an accident that is not the result of a collision. This covers a wide range of potential incidents.

#4. Collision Damage

Damage to your car as a result of a collision with another vehicle If your vehicle is ever in an accident, you can be prepared to pay for the damages with collision insurance. The larger your fleet, the more likely it is that you will need reliable collision prevention.

Fleet Insurance Rates

Insurance for a fleet is expensive, and having to pay a deductible is a pain. Businesses may find that commercial auto insurance is the most costly coverage option available to them. Fleet cars are different from personal vehicles in that they may have to be driven more regularly. 

That’s why comparing commercial vehicle insurance rates to those of private cars can be so difficult. By defending businesses against financial loss due to accidents involving company vehicles like delivery vans, taxis, and other commercial vehicles, commercial auto insurance fills this need. Commercial auto insurance provides protection for the unique risks associated with driving a business vehicle and typically has higher liability limits than those for private automobiles.

The cost of business auto insurance varies greatly from one company to the next. A monthly premium of $110 per vehicle is possible, depending on variables including the kind of automobile, the operator’s driving record, and the level of coverage selected. However, this could change based on the service provider and the company’s physical location.

In the event of an accident involving a company vehicle, the owner will want to know that their insurance will take care of any legal ramifications that may arise. Even if a salesman uses a company vehicle for personal errands after a day of making customer visits, the company could be held liable for any resulting injuries or damages. This is why, depending on the nature of the company’s operations, it may be necessary to obtain commercial auto insurance in order to safeguard company vehicles in the event of an accident.

How do Fleet Management Companies Charge for Fleet Insurance?

The costs of FMCs (fleet management firms) are normally set at a rate per vehicle. On a bill, insurance rates for one Fleet car will be itemized on its own line. This is standard practice for FMCs, as it helps them present their clients with a comprehensive picture of the costs involved. Companies with a small fleet of commercial cars should expect to spend around $1,000 annually, while those with a larger fleet can expect to pay around $1,500. Insurance rates for fleets can fluctuate for a number of reasons.

  • How many cars you have and what they all look like.
  • Your staff’s driving records and years of experience
  • Where you park and how you use your cars
  • The necessary extent and nature of insurance

Small and medium-sized fleet vehicles will cost their owners an average of $1,000 to $2,000 annually, while large fleet vehicles will cost between $2,000 and $3,000. However, these are merely ballpark figures, and the real price may be higher or lower than that.

By partnering with an FMC that provides all-inclusive fleet management solutions, you can save money on fleet insurance. What an FMC can do for you:

  • Try to haggle for lower rates with your insurance company.
  • Reduce danger by investing in safety measures and driver education.
  • Vehicle upkeep and monitoring might help you avoid breakdowns and mishaps.
  • Keeping tabs on your gas mileage and usage can help you save money.
  • In the event of damage, you must handle claims and repairs.

In addition to saving money on insurance rates and increasing productivity, outsourcing fleet management to an FMC also frees up your time to focus on your company’s key competencies.

Fleet Insurance Requirements

Fleet insurance requirements can vary based on the insurance provider and the specific needs of the business. However, there are common aspects that businesses typically need to consider when obtaining fleet insurance:

  • Vehicle Information: Businesses need to provide details about all vehicles in their fleet, including make, model, year of manufacture, vehicle identification number (VIN), and usage.
  • Driver Information: Information about drivers who will be operating the fleet vehicles is required. This includes names, ages, driving license numbers, and driving history. Some insurers might have specific requirements regarding the drivers’ ages or driving experience.
  • Usage Patterns: Insurers may want to know how the vehicles will be used. For example, whether they are for deliveries, transportation services, or other commercial purposes, usage patterns can influence premium rates.
  • Safety Measures: Insurers often inquire about safety measures in place, such as driver training programs, vehicle maintenance protocols, and safety features installed in the vehicles. Implementing safety measures can sometimes lead to reduced insurance premiums.
  • Claims History: The insurance provider might ask for the business’s claims history, especially if it’s a renewal policy. A good claim history can often result in more favourable premium rates.
  • Coverage Limits: Businesses need to decide on coverage limits for liability, collision, comprehensive, and other types of coverage. The coverage limits should be sufficient to cover potential risks associated with the fleet operation.
  • Compliance: Ensure that the fleet insurance policy complies with local, state, and federal regulations. Different regions might have specific requirements for commercial vehicle insurance.

Businesses need to work closely with insurance agents or brokers to learn about fleet insurance regulations and create a policy that fits their needs. The fleet coverage should be reviewed on a regular basis to make sure it continues to meet the demands of the company as it evolves.

Variables That Affect Fleet Insurance Rates

Here are some of the factors that affect fleet insurance rates:

#1. Types Of Vehicles

The premiums you pay for the coverage you require will vary greatly depending on the vehicle you pick to insure.

Insurance costs for cars are often lower than those for SUVs and some vans, and they can be even higher for trucks (whether light-, medium-, or heavy-duty).

#2. Typical Vehicle Age

The average age of your fleet has an impact on the total cost of your insurance coverage because it can be more expensive to repair newer vehicles than older ones.

#3. Vehicle Condition

Insurance rates tend to be lower for well-maintained vehicles since they pose less of a risk to the policyholder. The significance of adhering to a routine fleet maintenance program is further underscored.

#4. Vehicle Value

The total value of the vehicles you insure also has a significant impact on the fleet insurance rates you’ll pay.

#5. Intended Use

Your fleet’s insurance rates may vary widely depending on how they’ll be put to use.

Also, you should expect to spend less on your fleet insurance if your company’s vehicles mostly make house calls (for services like electrical, plumbing, or computer repair) as opposed to being constantly on the move (like taxis, rental cars, or shipping and transport firms).

#6. Choices of Policy

More comprehensive policies cost more than basic combination policies since they cover a wider range of potential problems.

#7. Miles Driven

The annual mileage of your cars can have a big impact on fleet insurance rates.

You increase the likelihood of an accident involving your commercial vehicles in proportion to the distance they travel. Therefore, it’s possible that your company will have to pay more for the insurance it needs.

Your vehicle’s value will decrease (or “depreciate”) as a result of the number of miles you’ve driven. If your fleet vehicles are driven a lot, even if they are well-maintained, you may end up paying more for insurance.

How Many Vehicles Make Up a Police Fleet?

The number of vehicles that constitute a police fleet can vary widely depending on the size and needs of the police department or law enforcement agency. There is no specific minimum or maximum number of vehicles that universally defines a police fleet. Police fleets can range from just a handful of vehicles in smaller towns to hundreds or even thousands of vehicles in large metropolitan areas.

The population served, the geographic area covered, crime rates, financial limitations, and the particular duties of the police department all have an impact on the size of a police fleet. Some police fleets might include patrol cars, motorcycles, SUVs, vans, and specialized vehicles like SWAT vans or K-9 units.

Each police department determines the size of its fleet based on its operational requirements and the resources available to it. Therefore, there is no fixed number of vehicles that make up a police fleet; it is contingent on the unique needs and circumstances of each law enforcement agency.

Advantages of Fleet Insurance

Here are some of the top benefits of fleet insurance:

#1. Less Bureaucracy

If your company insures its cars, vans, bicycles, and trucks independently, the policies for each vehicle will begin and terminate on different dates.

Adding more vehicles to your fleet during the year means you’ll have to keep tabs on even more start and end times. That’s not even mentioning the difficulty of filling out separate applications for insurance.

The administrative burden of remembering when insurance policies expire can mount quickly. And if you forget to renew your insurance and one of your company’s vehicles gets into an accident without coverage, it may be a very expensive mistake.

A single policy may cover all of your vehicles if you have fleet insurance, which reduces the number of renewal dates you need to remember.

#2. More Flexibility for Motorists

Costs for single-vehicle insurance policies are affected by whether or not coverage is provided for any drivers over a certain age threshold or for specific drivers.

Because of the significant limitations placed on your usage of cars and the people who can operate them, this can soon become cumbersome and detrimental to your business’s operations.

You may be more flexible about who can drive which cars thanks to a fleet insurance policy, which ensures the vehicles themselves rather than the drivers.

If a driver calls in sick, another driver can be assigned to their car until the original driver returns.

This is especially helpful for businesses that do not provide drivers with assigned vehicles but instead assign drivers to jobs as needed.

#3. Save on Costs

Adding many vehicles to a single policy can result in substantial premium discounts, which is just another perk of fleet insurance.

If you insure each car separately, the broker has less leverage to secure a discount on your behalf because each insurance policy covers only one vehicle. The insurance broker may be able to negotiate a lower cost; however, the more vehicles you wish to add to the policy, the less likely they are to do so.

In addition, the potential savings and discounts increase with the number of cars in your fleet.

#4. You’ll Be Covered as Thoroughly as With Conventional Auto Insurance

Fleet insurance provides the same levels of coverage as traditional single-vehicle insurance but gives you more leeway in how much you spend on your auto coverage, how you manage your policy, and who drives your company’s vehicles.

There are a variety of insurance policies available, ranging from the minimum required “third-party” coverage to more extensive “fully comprehensive” protection.

What Are the Disadvantages of Fleet Insurance?

Fleet insurance offers various benefits, but there are also potential disadvantages that businesses should consider:

  • Cost: While fleet insurance can offer cost savings compared to insuring each vehicle individually, it can still be a significant expense for businesses, especially if they have a large number of vehicles. Premiums can be high, and businesses need to budget for these expenses.
  • Complexity: Managing a fleet insurance policy can be complex, especially if the business has a diverse range of vehicles and drivers. Keeping track of policy details, renewal dates, and compliance requirements can be challenging, requiring efficient administrative processes.
  • Uniform Coverage: Fleet insurance policies might offer uniform coverage for all vehicles, but businesses with a diverse fleet may have varying insurance needs. Some vehicles might require specialized coverage, which might not be adequately addressed in a general fleet policy.
  • Driver Limitations: Some fleet insurance policies have restrictions on who can drive the insured vehicles. This limitation might pose challenges if businesses need to employ temporary or seasonal drivers or if multiple employees need to use the vehicles.
  • Claim Impact: If one vehicle in the fleet is involved in an accident, it can affect the overall insurance premium for the entire fleet during renewal. This collective impact means that the actions of one driver can influence the insurance costs for the entire fleet.
  • Policy Limitations: Fleet insurance policies might have limitations on the types of vehicles covered, usage restrictions, or geographic boundaries. Businesses need to carefully review the policy terms to ensure they align with their operational needs.

Businesses considering fleet insurance should weigh these disadvantages against the benefits and carefully assess their specific requirements before making a decision. In addition, working closely with insurance providers can help in customizing policies to mitigate some of these challenges.

How Do You Qualify for Fleet Insurance?

Qualifying for fleet insurance involves several considerations, and the specific requirements can vary among insurance providers. However, there are common factors that businesses typically need to address to qualify for fleet insurance:

#1. Number of Vehicles

Generally, businesses need to have a minimum number of vehicles to qualify for fleet insurance. The exact number varies between insurance providers, but it typically starts around five or more vehicles. Smaller businesses with fewer vehicles may need to explore other types of commercial auto insurance.

#2. Business Type

Fleet insurance is usually designed for businesses that rely heavily on vehicle operations for their commercial activities. This can include businesses involved in deliveries, transportation, logistics, construction, or any other industry where vehicles are an integral part of the operations.

#3. Driver Criteria

Insurance providers may have specific criteria for drivers, such as age, driving experience, and clean driving records. Businesses may need to ensure that their drivers meet these requirements to qualify for fleet insurance.

#4. Vehicle Types

Fleet insurance can cover a variety of vehicles, including cars, trucks, vans, and specialized vehicles. However, some policies might have limitations on the types of vehicles they can cover. It’s essential to ensure that the vehicles in the fleet align with the policy’s coverage.

#5. Usage Patterns

Insurers will inquire about how the vehicles are used. For instance, whether they are used for commercial deliveries, transporting passengers, or any other business-related purpose. Usage patterns can influence premium rates and policy terms.

#6. Safety Measures

Implementing safety measures, such as driver training programs and regular vehicle maintenance, can demonstrate to insurers that the business is proactive about minimizing risks. This can sometimes lead to more favorable insurance terms.

#7. Claims History

Insurance providers may assess the business’s claims history to determine the level of risk. A good claims history can positively impact the eligibility for fleet insurance and the premium rates offered.

What Is the Purpose of the Fleet Policy?: Bottom Line

In conclusion, a business may choose to invest heavily in liability insurance for a variety of reasons. Physical damage to a car, whether from an accident or vandalism, can be quite expensive. Medical costs coverage for bodily injury and other charges like towing fees are typically included in commercial auto insurance policies. When dealing with huge numbers of vehicles, the smallest details can suddenly become major headaches. 

In order to fulfil a wide variety of operational requirements, fleet cars frequently log lengthy hours on the road. Most commercial trucks, including delivery vans, semis, and others, need comprehensive collision coverage. Because of this, truck insurance rates tend to be high. The chance of an accident is substantially higher for these vehicles than for other business vehicles because they often navigate busy metropolitan streets and make frequent stops. Insurance companies are in a strong negotiating position when faced with increased risk, which is why higher-risk drivers pay more for car insurance.

Commercial auto insurance and motorist’s compensation can add up to a hefty sum. However, without insurance, the business would have to foot the bill for any injuries or property damage caused by an accident involving one of their vehicles. The cumulative effect of these expenditures on a business’s bottom line can be devastating. To avoid putting your employees and vehicles at risk of damage or bodily injury without commercial auto insurance coverage and some personal injury protection, a small business owner who feels compelled to go the fleet route should be prepared to pay for insurance claims with a higher deductible and an array of exclusions

Frequently Asked Questions

Why do companies use fleet vehicles?

Maintaining a reliable fleet of vehicles is essential for some companies. Companies rely on it to ensure their deliveries and projects are completed on schedule, regardless of the status of public transport. The organization can respond to inquiries from clients in a more personable manner.

Can you get fleet insurance in New York State?

Yes, businesses in New York can obtain fleet insurance. Fleet insurance is available in most states, including New York. However, the specific coverage options, requirements, and premium rates can vary between insurance providers and states.

To get fleet insurance in New York, businesses can contact insurance companies, brokers, or agents that specialize in commercial auto insurance. These professionals can provide information about the available policies, help assess the business’s specific needs, and assist in obtaining the appropriate coverage for the fleet.

Similar Articles

  1. Cheap Small Business Insurance: Best of 2023
  3. How Much Does Small Business Insurance Cost: 2023 Guide(Opens in a new browser tab)


Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like